How to Calculate a Reference Date?

What is a Reference Date?

In the realm of construction contracts, a reference date serves as the cornerstone for progress payments. It is the date on which a claim for a progress payment becomes valid or is used to calculate the payment amount. The contract typically specifies the reference date, but if it doesn’t, certain rules come into play.

Deciphering Reference Dates According to the Act

The Security of Payment Act emphasises the significance of reference dates by stating that on each reference date, a person committed to construction work or related goods and services is entitled to a progress payment. In simpler terms, a claimant can only make a claim on or after a reference date.

Identifying the Reference Date

To make a valid payment claim under the Security of Payment Act, a reference date must be pinpointed. This date can be set by the contract or the legislation and must be served within three months after the reference date or the contract-specified period (whichever is later).

So, how do you determine the reference date?

1. Contract Stipulation: If the contract specifies a time for progress claims, that specified date becomes the reference date.
2. No Contract Specification: In the absence of a specified time, the reference date is 20 business days after the commencement of work or supply, and subsequently, every 20 business days after the previous reference date.
3. Milestone Payments: Some contracts include milestone payments at different stages. In such cases, reference dates align with these milestones.

Qualifications and Considerations

• Only one progress claim can be made for each reference date.
• Previous progress claims not paid can be included in a new progress claim for a later reference date.
• Overlapping work, previously adjudicated or not, must be handled consistently by subsequent adjudicators.

Timing Matters

A progress claim must be made within three months after the last construction work or supply of goods and services. Some contracts may allow longer periods, but they cannot reduce the three-month period stipulated by the Act.

Understanding the intricacies of reference dates is essential for contractors and claimants alike. Once the reference date is identified, preparing, and serving a progress payment claim becomes a streamlined process, ensuring that the wheels of construction keep turning smoothly.